Novembro, 2002
www.b-reed.org
B-REED Introdução
Brazil Rural Energy Enterprise Development
Desenvolvimento de Empresas de Energia Rural no Brasil
O que é o B-REED
 Parceria do Programa das Nações Unidas para o Meio
Ambiente (PNUMA) e a E+Co ($$ da Fund. Nações Unidas)
– Surgiu do A-REED (UNF) na África; FENERCA (USAID)
– BRASUS e do Instituto Eco-Engenho (parceiros locais)
 Procuramos desenvolver e financiar empresas que usem
tecnologias de energia limpas, eficientes e/ou renováveis
– Projetos com potencial para expansão ou replicação
– Foco no nordeste (e.x. Bahia e Alagoas, Ceará)
 Objetivos: Fomentar empresas de ER e EE que são
economicamente viáveis para:
– Reduzir consequências negativas sobre o meio-ambiente e
a saúde derivadas das padrões energéticos em vigor
– Estimular crescimento econômico local com energia
2
O que o B-REED tem a oferecer –
5 Componentes
 1) Serviços de Desenvolvimento Empresarial (EDS) +
– Treinamento e instrumentos para auxiliar a iniciar e
desenvolver negócios (eg. planejamento, estruturação, etc.)
 2) Capital inicial (empréstimo, patrimônio, mezzanine, fundo de
aval), geralmente até US$100.000 (máximo $250.000)
 Parcerias com varios tipos de instituições financeiras co-fi
 Parcerias com outros atores interessados em desenvolvimento
sustentável, tais como ONGs, instituições governamentais, e o
setor privado:
– Facilitar desenvolvimento de projetos integrados (eg.
reflorestamento, créditos de carbono, educação) sinergias
 Intervenções na pólitica para promover legislação prática
3
Nossa abordagem é focada na empresa, mas
abrange vários atores interessados
PNUMA /
UCCEE
E+Co / BRASUS & IEE
Ferramentas/
Trenamento
Serviços de
Desenvolvimento
Empresarial
Empreendedores
Capital inicial
(B-REED / E+Co)
Governo/
Políticas
Usos Produtivos/
Geração de Renda
Empresas de
Energia Sustentável
Clientes
Rurais
Capital para
Micro-finanças
estágios futuros
(Instituições
financeiras e E+Co)
4
ENERGIA MODERNA é o fator chave para eliminar a
pobreza (círculos virtuosos sinergísticas)
Benefícios Sociais
Meio Ambiente
 Saude melhor
 Tempo para educação
 Oportunidades para
mulheres
e crianças
 Qualidade do ar
 Local (terra, ar, agua)
 Global (emissções
de gases de
efeita estufa)
Energia
Desenvolvimento Econômico
 Geração de emprego
 Maior produtividade
 Aumenta geração de renda
5
A Guia de Ferramentas (Toolkit) ajuda os
empreendedors fazer um plano de negócios
FERRAMENTAS
E
M
P
R
E
E
N
E
N
D
E
D
O
R
B
Idéia
Coleta de dados
Viabilidade
Plano de Negócio
EDS
R
E
E
Implementação
Expansão
D
6
O que é serviços de desenvolvimento
empresarial (EDS)
Assistência na elaboração do plano de negócios / expansão
Disenho de Estudo
de Mercado e do
Projeto Piloto
Criação do Modelo
de Negócios
Análise dos Riscos
e medidas para
reduzí-los
EDS
Formalização
de parcerias /
alianças estatégicas chaves
Suporte com
Assuntos Regulatórios e Legais
Contatos e Negociação com Parcerias
Análise de
Viabilidade e
Financeira
Estruturação e
Assess. Financeira
Preparação e
contatos para
conseguir cofinanciamento
7
B-REED tem um conceito de empresa
bastante abrangente
 Organização de qualquer natureza jurídica, geralmente de
direito privado, cujo projeto:
 Enquadra-se nos propósitos do programa B-REED
 Apresente viabilidade econômica e financeira
 Aberto a financiar empreendedores:



Com capacidades diferentes
Desde só com planos de negócios até aqueles expandirão
seu uso de ER ou reduzir / limpar seu uso de energia
Utizando várias tecnologias (geralmente provadas)
Tipos de empresas
 Micro, pequenas e médias empresas
 Cooperativas, OSCIPs, associações, etc.
 Instituições sem fins lucrativos
8
O que tipo de empreendimento podemos
financiar
 Abrange: 1) eletrifição rural, 2) geração de ER ligado a
rede, 2) fabricação, montagem, ou distribuição de
equipamentos, 3) usos produtivos, 4) eficiência
energética, e 5) subsituição de combustível mais limpa
 Para pequenos e médios empreendimentos  capital
pode lançar / provar modelos de negócios, facilitar
expansão / profissionalização
 Para projetos de grande porte  capital catalizador pode
ser crucial no estágio de pré-investimento (eg. para
financiar os estudos ambientais e de viabilidade, projeto
básico, etc.)
9
B-REED oferece uma filosofia diferenciada,
mais próximo a um parceiro
 Fornecer EDS (vs. só due diligence) facilita nosso
financiamento no estágio inicial, com maior risco
 Não temos necessidades de retornos de 20%+ em dólares
– Entretanto, não financiaremos a taxas reais negativas
– Produto financeiro diferenciado; não tentamos concorrer
 Abordagem mais flexível; desenhamos estruturas
financeiras, avaliando cada oportunidade caso por caso
 Não temos regras rígidas ou categorias como banco
 Financiaríamos com dívida, mezzanine ou patrimônio
 Objetivo é criar estruturas apropriados com flexibilidade
para antecipar a possibilidade de eventos externos
 Avaliamos os benefícios ambientais e sociais também
 Mais flexível em termos de garantias exigidas
10
B-REED utiliza uma abordagem de financiamento
flexível, mais próximo a um parceiro
 Nosso papel: fornecer capital de estágio cedo a um
custo razoável, quando não seria disponível
– Tentamos financiar o projeto em estágios (eg. estudo
de mercado, de viabilidade, ou um projeto piloto)
 Estamos dispostos a aceitar risco, mas acreditamos em
compartilhar o risco e o sucesso do empreendimento
– Usamos criteria de analisis sistemático (eg.
documentação legal adequada)
– Empreendedor deve investir proprio capital (eg. 30%
num novo negócio)
11
B-REED oferece capital a um custo mais razoável,
considerando os riscos que aceitamos
Risco
Capital
de Risco
Start-Up
B-REED
Estagio Inicial/
Alto crecimento
Participação
(Mezzanine)
Fluxo de
Caixa +
Dívida
5
15
25
35
US$ Retorno (%)
12
Passos do processo de investimento
Preparação e elaboração do cadastro e proposta preliminar
Elaboração do plano de negócio usando as ferramentas
Formalização do processo de EDS
Processo de diligência
Negociação do termos de investimento
Aprovação e liberação do financiamento
13
Setembro, 2002
www.b-reed.org
E+Co Introdução (www.energyhouse.com)
The “Energy Poor” spend an exorbitant amount of
resources to obtain inefficient forms of energy . . .
keeping them trapped in the vicious poverty cycle
The harsh reality
 2.4 billion people lack clean, safe cooking fuels
and depend on traditional biomass sources; 1.7
billion lack electricity1
 Time spent gathering wood and water prevent
education  development
 Traditional infrastructure has ignored them
 Their basic energy sources are being depleted,
slowly worsening their livelihood
 Hence, their ability to escape from the poverty
cycle is limited, making increases in quality of
life and economic impossible
The resulting environmental degradation
has both local and global consequences
1 World Energy Assessment (2000). Chapter 2, Energy and Social Issues, edited by Amulya Reddy
15
Not only could they afford to pay for modern energy . . .
but the poor are paying more for crude energy today
Dispelling the myths – they would pay
 The poor spend much more time and
effort obtaining energy
 The poor pay more per unit of energy
(eg. light from a kerosene lamp costs
100 times more than from electricity)
 The poor spend a substantial portion
of their household income on energy
just for basic survival (cooking,
heating, etc.)
 Energy poverty is not merely a rural
 Inadequate technology is not the
problem
16
E+Co promove a visão de um mundo onde todo mundo
tem direito a energia moderna, confiável e limpa
Missão
Fornecer financiamento de primer estagagio a empresas de ER,
mostrando a viabililidade e eficiência desta abordagem,
 estimulando o fluxo de mais capital para este setor
O resultado
 Desenvolvimento social via a criação de oportunidades
econômicas, melhorando a padrão de vida e elimando a
pobreza
 Preservação ambiental
 Returno razoável sobre o capital investido  reinvestmento
17
O que significa ser um “non-profit”
 O que significa ser non-profit / 501-C3 ( “empresa”
sem fins lucrativos)?
– Isenção de impostos EUA; facilita conseguir fundos
de fundações para cubrir custos
– No existe dono da empresa; nossos lucros seria
reciclados crescer e para financiar outras
empresas
– Não operamos fundos não-reembolsáveis;
procuramos retornos para cubrir custos
operacionais
18
Mais do que um financiador de ER; promovemos o
crecimento do setor
 Valorizamos os retornos ambientais e sociais também
 Estimular co-financiamento de IF’s e estratégicos
 Compartilhar experiência via seminarios; disseminar
materiais
 Intervenções na pólitica para promover legislação prática
 Adaptar o modelo aos vários países (ONGs locais),
compartilhando experiências, conhecimentos e
tecnologias
19
E+Co: Os resultados durante uma década . . .
 Currently invested in 60+ enterprises in 30+ developing countries.
Over 80 investments (~$9 million) since 1995 in 37 countries
 24 investments now delivering clean energy services to more than
200,000 people
 E+Co investment has leveraged $40 million of investment from
other public and private sources  500 jobs
Exemplos
 3 hydro facilities – 23 MW of new clean electricity in Bolivia,
Guatemala and the Philippines
 12 Rural Energy Services Cos – serving 29,000 previously
unelectrified households in Bangladesh, Brazil, Costa Rica,
Dominican Republic, El Salvador, The Gambia, Honduras,
India, Lesotho, Morocco, Nepal, and Vietnam
– ~1.4 MW of new renewable electricity
20
E+Co: Os resultados . . .
Exemplos cont.
 1 small wind turbine manufacturing facility in China
 3 biomass plants – 6 MW of new clean electricity in Bolivia,
Thailand and the Philippines
 A biogas manufacturing company in Vietnam - 2,900
household biogas digestors; 2.2 million m3 of biogas
 A treadle pump manufacturing company in Bangladesh –
selling more than 200,000 pumps/year, displacing previously
used diesel and generating ~$100 more per year per farmer
 30 brick production micro-enterprises converted from a
sawdust-based and used lubrication oil fuel to clean, efficient
natural gas – Bolivia
21
Os resultados . . .
22
Setembro, 2002
www.b-reed.org
E+Co: 3 Estudos de Caso
E+Co Case Study:
Soluz Honduras – Project overview
Company overview and strategy

Soluz Honduras S.A. de C.V (“Soluz Honduras”) is a Honduran corporation
and a majority-owned subsidiary of SOLUZ Inc. Soluz Honduras began
operations in 1998, seeking to leverage experience gaining from the
operations of Soluz Dominicana, which began operating in 1995.

It is a pioneer in the implementation o rural photovoltaic (PV) solar home
system (SHS) delivery through the rental (“fee for service” model) of
different-sized PV SHS systems. By maintaining ownership of the systems,
Soluz is able to provide energy at affordable monthly rents and deliver its
product to a greater penetration of the population. These prices are
equivalent to what villagers would pay for kerosene, dry cell batteries, or
recharging car batteries for TV usage.

Soluz Honduras’ strategy has been to attain sufficient scale in order to cover
fixed costs; the company is also looking to diversify into other products in
order to accelerate reaching a cash flow positive state.
E+Co relationship

In June 1998, E+Co granted the first US$100,000 loan to Soluz Honduras.
The second US$100,000 loan was subject to the compliance of certain
covenants, including conducting a market development study and securing
additional funding (either equity or debt) amounting to at least US$500,000.

Despite the fact that at the time when the second disbursement was
approved the two last covenants were pending, E+Co decided to approve
the second loan on June 1999. This was due to the fact that Soluz
Honduras needed these funds for working capital to cover its inventory and
operating expenses.

Due to E+Co’s timely financing, Soluz Honduras in 2000 was able to secure
several loans and equity investments from IFC, CFA and the SIF. These
loans totalized US$525,000 and the equity investments US$225,000.
Photo of a PV SHS in Honduras
Social and environmental impact

Honduras has an estimated population of 2.2 million rural
residents, of which 40,000 households have no electricity; it is also
estimated that approximately 80% of these households have
monthly incomes of less than US$137, with current energy
expenditures of about $4.50.

The alternative of obtaining energy services on a “fee-for-service”
is in the short-term the only option available for these families,
where there is no alternative for them to get connected to the grid
and where the households cannot afford credit or cash sales of
such PV energy systems.

PV solar home systems have neutral environmental impact,
creating electricity from sunlight and producing no emissions. The
use of PV substitutes the use of dry cell batteries, kerosene and in
some other cases, the use of diesel generators from rural electrical
energy services.
24
Soluz Honduras – Investment overview
Key terms of financing
Financial highlights

Type: Senior Debt

Amount: US$200,000

Tenor and payment schedule: The total loan was made through two
disbursements. The first was for $100,000 with a grace period for loan
amortizations of 12 months; the second disbursement had a grace period
of 6 months. The average loan term was of six years, elapsing 5.5 years
after the second disbursement.




(US$)
Revenues
Growth
1998
1999
2000
2001
51,330
131,331
138,949
211,906
NA
155.9%
5.8%
59.4%
EBITDA
(106,100)
(43,535)
(88,795)
(92,903)
CAPEX
145,324
94,348
367,002
199,013
11,657
19,885
28,544
679,945
Interest expense
Guarantee: First pledge over Soluz Honduras shares; indirect pledge on
SHS
Loan amortizations
0
17,083
195,781
195,390
Total debt
171,645
264,562
466,289
684,289
Key covenants: Test market installation of 100 SHS units ($50,000),
market development ($50,000) and installation of 200 SHS units
($100,000).
Equity invested
287,268
287,268
346,131
474,089
Interest rate: 7% per annum
Sponsor equity contributed at time of investment: US$55,296
Operational metrics
Statistics on as of September :
Total customers served
Total Fee-for-Service (FFS)
FFS Customers added
FFS collection rate
FFS customers on wait list
Communities served with FFS
Installed FFS kW equivalent
Total Number of Employees
2
Debt / (Debt + Equity )
37%
48%
57%
1
B/S items as of September 2001 and I/S nine months annualized.
2
Invested equity
59%
Management & Ownership
1999
938
404
40
96%
31
2000
1,197
636
63
92%
2
2001
1,740
1,156
91
98%
15
109
160
152
250
15
259
460
16
Management (Soluz Inc.)
President
Vice-president
Title
Richard Hansen
John Rogers
Management (Soluz Honduras)
General Manager
Institutional
Relations Director
[Ownership table]
Title
Loyda Alonso
Diana Solís
Shareholder
Soluz Inc.
Corporación Financiera Ambiental
International Finance Corporation
Stichting Solar Investment Fund
Ownership
76.74%
8.31%
6.65%
8.30%
25
E+Co Case Study:
Red Ceramics – Project overview
Company overview and strategy

The “Red Ceramics” natural gas fuel substitution project, initiated in 1995,
was developed by the Red Ceramics Association (“ACR”) in Alpacoma, La
Paz. The Association consisted of 40 members, each with a kiln for the
manufacture of construction bricks. ACR is located, on the western ledge
of La Paz, close to the poorest residential areas.

The fuels used in the ovens, before the fuel substitution, were sawdust,
used lubrication oil and scrap wood. However, the severe air pollution
caused by using these materials and the incompliance with local
environmental regulations implied the risk of closure of the business.

ACR hired an engineering consulting firm to design a new system using
natural gas that would comply with environmental regulations.

After obtaining the municipal and environmental permits, implementation of
the project began in October 2000. This was particularly arduous given that
most of the ACR members, as rural emigrants to La Paz and of indigenous
descent, have only minimal education; they hence experienced some
cultural barriers in dealing with local authorities.
Photo of brick manufacturers
E+Co relationship
Social and environmental impact

Due to the cultural and socioeconomic background of the ACR members,
E+Co’s role extended beyond that of a typical lender; it included advisory to
assure that the proper legal, administrative and technical decisions were
made, as well as help securing the supply and construction contracts.


The social benefits targeted in this project were primarily focused on
preserving the jobs of 30 families facing closure due to the threat of
environmental restrictions on use of sawdust and used lubrication oil in
the manufacturing process.
After receiving a financing request, E+Co contacted Caja Los Andes
(“CLA”), a local micro credit bank, to be a co-financier. CLA extended credit
on the basis of the technical and economical evaluation performed by
E+Co.

Another objective of the project was to increase the income of the
families and improve their working and living conditions around the
project zone, with the reduction of noxious gas emissions.

In September 1999, the loan was made by E+Co for US$ 160,534, together
with a debt service collection service contract with CLA.


In September 2000, the loan amount was increased by US$ 41,625, given
unforeseen additional costs to complete the project.
The environmental impacts associated with the use of clean fuel not only
benefit the local neighborhood of the Red Ceramics Association, but also
the large and densely populated urban areas of La Paz, where air
pollution is a significant problem.

Due to lower brick demand and prices in 2001, E+Co granted a 10 month
debt service reduction, lowering monthly payments by 40%. In 2002, a
term extension of 12 months was also granted. As of March 2002, 30% of
the debt had been repaid and ACR continues on debt payment schedule.
26
Red Ceramics – Investment overview
Key terms of financing
Financial highlights

Type: Debt

Amount: US$202,160

Interest rate: 9% per annum

Tenor and payment schedule: 64 month tenor with 12 month grace for
interest payments and loan amortizations

Guarantee: Each debtor registered the mortgage of his real estate in to
E+Co. In addition, ACR committed itself to take disciplinary measures in
case of default of any of its members.

Sponsor equity contributed at time of investment: Of the total investment
of US$260,000, ACR contributed US$57,840 as in-kind equity through
the provision of labor for the excavation and filling of ditches, as well as
for other masonry works.
(US$)
Revenues
Growth (%)
EBITDA
EBITDA Margin
Interest Expenses
Loan Amortization
Total Debt (e.o.p.)
Equity invested
Debt / EBITDA
EBITDA / Interest Exp.
EBITDA / Debt Service
2000
652,079
15,680
2.4%
13,685
10,716
191,444
NA
2001
706,863
8.4%
124,736
17.6%
14,731
44,010
147,435
NA
12.2x
1.1x
0.6x
1.2x
8.5x
2.1x
2002F
2003F
680,682 680,682
-3.7%
0.0%
121,610 121,610
17.9%
17.9%
10,954
7,455
41,582 50,002
105,853 55,850
NA
NA
0.9x
11.1x
2.3x
0.5x
16.3x
2.1x
Operational benefits
Management & Ownership


ACR is equally owned by its 40 members

The ownership of the natural gas distribution system, from the main gas
pipeline to each member’s property gates, belongs to the ACR, which
contributed with in-kind labor for its construction and installation.

The assets installed on the property of each associate member belong
entirely to that individual.

The maintenance of the civil works and the maintenance of the distribution
system is the responsibility ACR.

The Natural Gas Distribution Company (YPFB) is responsible for the main
gas connection feeding ACR, the distribution system, as well as for gas
provision, pressure regulation, measurement, and billing and collection.

The most remarkable quantitative impact was the decrease in brick
losses due to overcooking and smelting of bricks; production losses were
reduced from 14% to 5%.
Another efficiency gain was the 14.6% increase in total net loading of
each batch, due to reduction of unused space in the new ovens. These
advantages afforded by the new fueling system were important in
maintaining the viability of the business, as in 2001 there was an
unexpected decline in brick demand and a fall in local brick prices.

The total production increased from an estimated 15.8 million bricks in
2000 to about 20 million bricks in 2001.

The total pollution, mainly from the use of sawdust and used lubrication
oil, was reduced by more than 80%. Moreover, the bricks manufactured
with natural gas are of higher quality and hence more competitive than
the ones that had been produced with traditional fuels.
27
E+Co Case Study:
Kanata Hidroelectric Plant – Project overview
Company overview and strategy

In 1993, SYNERGIA S.R.L., a small Bolivian company, was founded to
develop a 7.5 MW hydropower plant, using an existing water supply
reservoir located at an altitude of 4,350m on a mountain watershed
above the historic town of Cochabamba on the edge of Lake Titicaca.

For over 40 years, these waters had been channeled through an open
canal to a reservoir located at the mountain pass and, from there, to the
bottom of the mountain through a gully along 7.5 km. However, this
existing viaduct system resulted in water losses of about 30% (about
2.38 million m3), hence limiting the potable water supply of the town.

The Kanata plant sought not only to provide an important source of ongrid electricity to the local community, but also to increase the amount of
potable water to the community.

From 1995 and 1997, SYNERGIA obtained the legal concession,
obtained the necessary land and corresponding rights of way, secured
project partners, and raised the necessary financing. The construction of
the project started in 1997 and was completed in April 1999.
Power house and lower reservoir
E+Co relationship
Social and environmental impact

In August 1995 SYNERGIA S.R.L. initially requested a US$ 250,000
financing from E+Co, contingent upon the availability to find other cofinancing sources to fully fund the project. The loan contract was signed
on September 19, 1997.


E+Co early financing commitment was crucial in helping the project
demonstrate its viability and consequently successful raise the additional
debt and equity financing needed.
The original water conveyance through the gully of Thola Pujro, due to its
steep slope (1,350 m in 7 km), provoked significant erosion for more than
40 years, causing occasional landslides and polluting the water, both
physically and bacteriologically; the new water conveyance through the
penstock eliminated such erosion and pollution.

The water losses (by evaporation, infiltration and pulverization along the
gully) were significant, representing about 30% of the total flow. As this
was the main source of potable water for the growing town, this was a
detrimental loss. The project resulted in savings of 2.4 million m3 of
water per year, supplying another 40,000 inhabitants (at 150 liters per
inhabitant per day). SYNERGIA provides this additional water at no cost.

The electricity production, incorporated in the distribution grid, is
sufficient to provide enough electricity to about 50,000 households.
Moreover, the hydro energy does not produce any greenhouse gasses.

The loan has since been fully repaid.
28
Kanata – Investment overview
Key terms of financing

Type: Debt

Amount: US$250,000

Interest rate: 9% per annum

Tenor and payment schedule: 18 month grace period followed
by three year repayment period (with bimonthly payments)

Key covenants: Use of an escrow account receiving the
monthly payments from the power sales to the interconnected
system (with E+Co debt service payment as as primary
obligation for the account)

Sponsor equity contributed at time of investment: US$ 1.86
million
Operational metrics

Annually, the project produces 20.4 to 24 GWh and a net
capacity output of 7.4 MW, not including the consumption for
the internal operation of the plant.

From May 1999 to March 2002, the plant operated during
about 12,000 hours, with only a 0.01% outage rate.

Besides this performance reaching 99.99% reliability, the plant
provides 7.94 million m3 of clean water per year to the town of
Cochabamba, delivered via the local water supply and
distribution company (SEMAPA).
Financial highlights
(US$ 000s)
Revenues (w/out VAT)
Growth (%)
Expenses*
EBITDA
EBITDA Margin
Capex
Interest Expenses
Loan Amortization
Total Debt (e.o.p.)
Equity invested
Debt / (Debt+Equity)
Debt / EBITDA
EBITDA / Interest Exp.
EBITDA / Debt Service
1998
163
123
40
24.8%
4,339
161
0
4,273
1,760
1999
618
278.2%
340
278
45.0%
1,725
168
98
4,175
1,858
2000
1,044
69.0%
471
574
54.9%
NA
347
149
4,151
1,858
2001
905
-13.3%
367
538
59.4%
NA
325
392
3,325
2,533
2002F
883
-2.8%
343
540
61.2%
NA
300
291
3,034
2,653
2003F
889
0.7%
334
554
62.4%
NA
274
256
2,778
2,653
70.8%
105.6x
0.3x
0.3x
69.2%
15.0x
1.7x
1.0x
69.1%
7.2x
1.7x
1.2x
56.8%
6.2x
1.7x
0.8x
53.4%
5.6x
1.8x
0.9x
51.2%
5.0x
2.0x
1.0x
Ownership
Shareholder
SYNERGIA S.R.L
STYRCON G.m.b.H
Continental Visions Ltd.
Ownership
60%
20%
20%
29